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Sunday, 30 April 2017

April showers further dampen Crowdcube investors' hopes.

As if the cold wasnt bad enough - Crowdcube investors have been hit with more bad results.

A bunch of results for April - 

Ikee - raised money on Crowdcube in 2015. We had an email from a shareholder suggesting this one was a scam. As yet the company has no website and as far as we can see no product. Losses of £73k pretty well wipe them out but there is always hope. They were one of Crowdcube's incubated start ups, so maybe not. 

Angelberry - continue to make losses and seem unable to open any new outlets - which was the purpose of the Crowdcube investment. Projected profits for YE Jul 16 were £1.7m. The actual loss is only £10k but they are insolvent. How they are still trading is anyone's guess. Their website is down but they do seem to have outlets in some far flung places like UAE, SA and Mauritius. A shareholder told us that they hadn't heard from the company since March 2015. For those of you still unclear why we bang on about the projections these companies use with Crowdcube's blessing, here is a clip from their 2014 Crowdcube pitch  - 

The current valuation is based on a multiplier of 2.8 x Year 2 net profit. Based on our growth and profitability forecasts we expect an 8.4 x return of investment for investors if we exit in Q1 of 2017. 

Holly and Beau - Another one that is insolvent. Filed losses of over £90k on a projected turnover of just £110k mean that something has gone wrong here. 

Lumo  - smaller losses than predicted but have not raised the new debt they projected. Could be OK or could be like other Crowdcube businesses that have exceeded their projections through lack of activity. When you are selling a Polo shirt for £60, the latter option looks more likely.

Jam Vehicles, Ethos Global, Alquity UK and Little Brew, all look lost as filed accounts now very overdue. 

Saturday, 29 April 2017

FT gets it all wrong on Crowdfunding bonds

A recent article in the Financial Times is wholly wrong about the Crowdfunding Bond - but good to see they read our blog!

You would expect journalists with the FT to have a higher standard. Aime Williams' piece on Brewdog here  makes you wonder.

She is right in her interpretation of the recent 2800% ROI for round one investors in the Scottish punk brewer - it is not a 2800% return as we pointed out sometime ago here. She is wrong in the description of the TSG deal - out by 100% on the money paid.

But the misinterpretation of how the Crowdcube bonds work is not so good. To claim that people would be better investing in shares - which as we all know have no market - when they can invest in a short term bond at 8% is hard to explain. And she doesn't try.

Whilst the bonds have no security, on the sort of life span that they have and with the background of the sorts of companies that have issued them, they really dont need any. Take for example the bond issued by the River Cottage Group, also on Crowdcube a few years back. River Cottage have missed all of the targets the financials for the bond projected - they are not doing well enough to generate the spare cash to repay the bond. They are, however, doing well enough to pay back the bond holders, as all they need to do is use their brand to borrow more cash when the time comes. You have to take a view before investing as to whether old Etonian, Hugh Firmly-Withastool, is going to default on his debts; in the glare of the media. They are not going to default in the bond as this would almost certainly mean the end of the business. There is your guarantee. Meanwhile you are getting your 8%. Its a similar situation with The Eden Project, where revenues have come in way short of projections since their Crowdcube bond but it is still going to repay its debt. Shareholders get nothing unless the company IPOs or is sold - which is entirely outside their control and has no time frame. Their shares are worthless bits of paper in reality.

What Williams has ignored, is that bonds are only issued by companies of some substance and with a track record. They are not issued by start ups - which is where the equity side comes in. They are not issued by start ups for the simply reason that people wouldn't buy them. Her reading of this situation is simply wrong - and surprisingly so. Its seems pretty obvious to us. Bonds offer a good return for a lower risk, set over a short term. Equity, as Crowdcube run it, offers god knows what.

It is not a question of either or - both offer totally different outcomes for totally different reasons. At least the bonds give investors a modicum of control.

Friday, 28 April 2017

Redchurch pitch shows Crowdcube dont listen.

Redchurch Brewery raised £500k last year on Crowdcube at £2m. Having missed all their targets and burnt their cash they are now back for another £400k at £5m.

What is it Crowdcube dont understand?

Redchurch may well be a class brewer but their business management is taking the P. They have managed around 50% of the projected sales in the 12 months since they were last here. Do they understand that these figures dont work inversely? You cant half your turnover, increase your losses and then more than double your valuation. That only happens in politics.

Whether on advice from the Crowdcube interns or not , common sense dictates that the company cannot be worth 2.5X what is was 12 months ago. The company even admits that sales have been slower to take off than they anticipated. So why the increase?

What makes it even more ridiculous is that the projected figures for 2015/16 are also miles out when set beside the filed accounts. And they were mainly actuals in the 2016 pitch. YE June 2016 showed a filed loss of £170k against a 2016 projected profit of £1000. You simply cant believe what they say.

From the comments on their forum, it's clear investors are not too happy. Nor would we be. So as not to alarm last years intake, they havent produced any detailed figures in this new pitch. Wonder why?

Thursday, 27 April 2017

Podpoint signs deal with Savills

Podpoint, which has raised on both Crowdcube and Seedrs, has now signed a deal with Savills, who manage 75 retail parks in the UK.

It's still early, but this deal could be a major break though for Podpoint, who have till now struggled to deliver on their targets.

The deal is for Savills to be 'encoraged' to place the recharging units across their retail parks - so the outcomes are vague. But it has to be a step in the right direction. 

Solarmass losses half its volume

Solarmass funded on Crowdcube back in 2014. It has failed to live up to expectations. Now one half of company has left.

We wrote about them here a year ago as they seemed to making some progress. Luke Lang got very excited about it all. It's one of the Crowdcube companies that hasnt closed but hasnt done much else either. 

For one of the two co founders to have just resigned, you have to assume that the company isnt really going to make it. 

One footnote - any company that uses TM in an attempt to make you think they have some legal ownership of their brand is not worth bothering with. 

Wednesday, 26 April 2017

Farmdrop to expand outside London with £7m of new cash

Farmdrop raised £750k on Crowdcube in 2014. Now with over £11m invested in the company since, they are finally ready to launch outside London.

According to the 'simplistic' (Crowdcube's own term for their projections) projections that Farmdrop used on Crowdcube to sell their equity, they should now be turning over £70m (YE July 2017). According to Crowdcube's own blog, they expect to achieve £3m this year. 

Clearly someone thinks this is going to work on a scale, as investors led by Atomico have just put another £7m into the company. We have estimated that this was at a pre money valuation of around £14m. Crowdcube investors took shares at a valuation of around £2.5m. Atomico invested another £3m last year. We estimate that on the current valuation with dilution assumed, CC shareholders have been diluted 100% but have seen the value rise by 550%. Paper value, that is. Working backwards on 10X eventual EBITDA and a 5 times return on this round (value £21m post money), the company is going to have make a profit of over £10m. At its stated 6% EBITDA rate, that means revenues of £166m. So presumably an early sale based on numbers of current subscribers is more likely. 

The company is nowhere close to break even and it seems to us that after so long in London and with considerable investment and promotions, the revenues are small. But that's the way these tech driven investments go. Build to scale and hope that the profits follow. With the rapidly changing environment we live in we'd be bricking it a little on this one. 

Trust Pilot reviews are excellent unless you check them out by dates. All of the the poor reviews are very recent, possibly suggesting a problem with upping volumes? As with Just Park, the one defining  factor that Farmdrop have little control over is the consistent quality of the produce, once they have signed up a supplier. Bristol is next - worth watching how that goes.  

Tuesday, 25 April 2017

Pallet Eater reaches for the diocalm

Perfect timing - A Crowdcube funded company shows us all how well vetted and sensible their plans are  - in reality.

The Pallet Eater was described in its Crowdcube pitch in 2014 as - 

In contrast, The Pallet Eater picks up and stacks pallets in one seamless movement, electronically adjustable to the required pallet size as required. Moreover, the Pallet Eater builds and straps a squared column every time, reducing hazards and handling costs in the process.
The Pallet Eater turns this cumbersome link in the distribution process into a seamless part of the operation which should reduce time, cost and injury.
Compact, agile and easy to use, the Pallet Eater is built upon proven existing technology. As such, the concept is simple and we will require no further R&D before taking The Pallet Eater to market. 
We were sent information recently by a shareholder in this company - Stacking Systems Ltd. This is the same company that claimed in 2014 to have a machine that 'picks up and stacks pallets in one seamless movement'. Within the information package was a video which shows the latest version of the eater in action - stacking 4 pallets. This takes the machine over 3 mins. It is cumbersome and on several occasions the pallet gets stuck. It would have taken a human around 30 seconds to stack these four  - seamlessly. 
In their most recent accounts to YE July 16, the company made a £4k loss. It has no cash and a massive intangible asset of £150k - the 'IP' for the phenomenal Eater we presume.
People on Crowdcube invested over £130k in this. The projections, you know the ones Crowdcube called 'simplistic', showed the company making over £700k in net profits for the last year and over £1m to YE January 2017. This 'machine' couldnt make 5p. 
Now we know that these things take time. But it clearly states in the Crowdcube pitch that the machine already stacks pallets.....seamlessly - that was in 2014. We have seen the video and we feared for the operators safety moving 4 pallets 2 yards in late 2016. Their statement that the Eater requires no further R&D is accurate in that it clearly has not received any R&D - ever. It simply doesnt work.
Investors deserve better from you, Darren and Luke. In a recent excuse given to The Times about precisely this sort of outcome, Crowdcube claimed our research was 'simplistic' and that they gave investors a large volume of information to help make their decisions. We assume that both Darren and Luke would have been referring to the fact that this Pallet Eater moves seamlessly around a warehouse creating beautiful squared monuments to world of pallets. The only problem boys, as in so many cases on your platform, it doesnt and they do not. Time to leave the field for the professionals.

Monday, 24 April 2017

Big time investor in start ups agrees with US

After the recent article in The Times - https://t.co/95DwWuLTv8 - we were contacted by an ex Investment Banker with some real experience of investing in start ups over 14 years. We thought we would share it with you. It's not the picture Crowdcube paint, but that should come as no surprise.

So Mr X told us that he invested over £2.8m in 12 start ups between 2000 and 2014. That is a very sizeable chunk of cash in a good variety of businesses. Mr X considers himself a sophisticated investor who knows the ways of the world. He was in the City for 24 years. 

Below is the text of his email laying out his story - 

Just read about your blog in the Times, and took a look. I hadn’t seen it before as I gave up investing in start-ups two years ago, for reasons you will see below.

Anyway, real and current evidence is very difficult, so I thought I would share my experience.
Between 2000 and 2014 I invested £2,814,000 in 12 different start-ups.

Of the 12, There have been
Two successful exits - one made 400% return, but this is 11% IRR over 16 years which is the real measure. The other 82% return in 2 years, 42% IRR, and I had to work hard with the company to make it happen.
Six total losses - most have failed pretty quickly, within 2 to 3 years.
One alive and cash generative
Two alive zombies - spinning wheels but not making or using cash One semi- zombie, good product and in seventh year but constant fundraising

If I count zero returns from those still alive but no market for their shares, I have lost £1,264,000, which equates to IRR of -14%. This is with EIS rebates, which have been considerable at £610,000. If I ignore EIS benefit, £1,874,000 has gone!

But it’s not that bad as the remaining four companies I estimate are conservatively worth c. £600,000. Let’s add that into the mix and net loss is £664,000, and IRR of -5% over 17 years.

For full disclosure, one of the total loss startups was one I founded myself and worked hard on. We burnt through £800,000 of shareholder funds (including £200K of mine). The business model just didn’t work so we cut our losses.

These investments were at what seemed at the time very sensible valuation levels. Certainly far more sensible than we see today on Crowdcube and Seedrs, where I can only describe some valuations as bonkers. So I can only assume a portfolio of investments would be even worse than my experience. My last note to investors is to avoid films at any cost - two of my total losses and one of the zombies were films. The intricacies of the film business and completely unethical practises I experienced, but which seem normal to them, stack the odds even more against investors.

We think this makes interesting reading - if only to warn people that promotions used by the likes of Crowdcube are highly misleading. You can see from this that returned are very hard and often take considerable input - something that never happens in Crowdcube funded companies.

That is not to say ECF cannot work - it's just that the Crowdcube model cant. Unfortunately The Times forgot to include in their article on our work , the fact that we offer companies looking to use ECF a consultancy service. The idea being that we help you gain the best results. Its cash flow neutral as we only charge on results. We are not negative about ECF but we can see and understand the shortcomings of the Crowdcube and Seedrs models. There are others out there trying to do a better job. 

Tuesday, 18 April 2017

On line journalism is wholly unreliable

Spot the difference in these images, apart from the perspective. That's right, they are in fact the same places.

These images appeared in Business Insider and the Manchester Evening News a year ago in articles on a Crowdcube funded company - U Brew.

The Manchester article had the caption - 'The UBrew Taproom in Manchester' and the Business Insider piece had the caption 'UBrew's Bermondsey Taproom'.  Both articles were about the company opening a new UBrew in Manchester, off the back of the reported phenomenal success in London. This was a year ago and according to the Business Insider, the company had already pre-sold 75% of its Manchester memberships and was massively oversubscribed in London.

We dont know if these pictures are taken in London or Manchester but we think it's London. It certainly isnt both unless they have a cut and paste business model. According to the company's website, they only have a taproom and operation in London. New hubs in Berlin and Manchester are 'pending' and have been for over a year now. This seems a little odd given that a year ago they had 'sold' 75% of Manchester's membership; according to the articles. 

What can you believe? Well clearly nothing in either of these two virtual fish and chip wrappers. The intern who wrote the piece for BI, then wrote another piece on Ubrew in February this year. Seemingly Ubrew was a massive hit with 459 courses sold in 2016; up from just over 300. Courses costs on average £100 - you do the math and see if this a scalable proposition! BI just trotted out more and more of their plans to go global whilst ignoring all the nonsense it wrote back in April 16. The two pieces are here and here. The Manchester EN piece is here.

There are other oddities. In the BI article, it is stated that the company had just raised another £140k from some business angels but there is no allotment of new shares form SH01 at CH for this. The Confirmation Statement for 2016 confirms the issue of extra shares and the presence of some new shareholders. But where is the allotment document? Failure to file this document is an offence. Ubrew contacted us on Twitter to say they had 'raised' 3 rounds of funding - two via subscriptions and one equity. The one equity must be the Crowdcube campaign. Never in the history of business funding have we heard of business angels 'funding' a company by buying their product in advance. That is simple rewards based crowdfunding. So again the BI article is incorrect. We asked Ubrew to confirm this but had no response.

As you would expect the interns at Crowdcube have been posting all this rubbish as real news. How investors are supposed to be able to make a value judgement based on this type of false news is beyond us. 

Saturday, 15 April 2017

The real facts behind Brewdog's exiting punks

When something seems too good to be true - it usually is. Commentators on Brewdog's recent 2800% return for its punk shareholders have missed the main point.

We had this comment from a reader and shareholder in Brewdog - thank you - 

I have about 11000. I am not going to criticise the boys as they have done a great job and have also provided liquidity via Asset Match. It's just a shame that the amount i can sell is so small. There have been share splits in the past so i genuinely didnt had no idea how many shares i have until i looked it up. Yesterday Brewdog sent an email stating that the purchase price would be £13.80 so I and others will get £550 for 40 shares. I would have loved to have been able to sell 15%.

We can all agree that Brewdog has been a massive success. It's just, when hangers on like Crowdcube try to claim some of it, that is when the wheels fall off. 

Permanent Apologist for Crowdcube, JD Alois of Crowdfund Insider, has taken the bait, hook line and sinker. Hardly a surprise given the other articles this JD Alois has written on ECF. Naive would be our kindest thought - https://www.crowdfundinsider.com/2017/04/98617-crowdfunded-unicorn-brewdogs-deal-vindication-crowdfunding-process/ And no we didnt give him the quote he used in this article - he lifted it off the blog without permission in what is a total misrepresentation. 

So essentially all shareholders of any size ie over the 40 share limit of £550 are locked in until such time as the company goes public, is sold or they hold another sale on Asset Match. Not quite the deal as it has been painted. Not only are they tied in but they are now subject to the PE deal done with TSG for 22% of the company - ie C Pref shares that return 18% pa no matter what. 

So how can the company be claiming that it is giving its punks a return of 2800%? It isnt. That would only be true if the punks had some way to sell all the shares they bought in round one - but they are limited to 40. So it's mutton dressed as lamb, for a topical Easter analogy. Why didnt JD Alois pick up on this fact - well he may not be bright enough. The potential return for investors is 40 times £13.80 which is £552. Now if you invested £2000 in round 1, you have paper worth nothing in reality and £552 in cash. Of course this paper could be worth loads later but it isnt today as you cannot sell it....anywhere. 

So as Brewdog is such a success,.how come people are not queuing up for their shares - market or no market. Well maybe the current valuation has rather stripped out the up side for now? TSG only put in £230m because they were getting 18% on their C pref shares and one assumes some control over the management. You wont find that offer for your shares. Which, to come full circle, rather begs the question  - is this really a £1bn valuation? Only if you are Crowdcube and JD Alois.

Interestingly, TSG must have agreed to all of this before investing - the limit and the price per share. They wouldnt have invested so much if they knew Brewdog were then going to be cash poor by buying back too many shares. So someone apart from James the Cap is now wagging the dog's tail. 

If you ask the question why did Brewdog, a company so against the mainstream, indulge in selling to a massive US corporate PE firm, you get a little clearer picture of why the limit of 15% or 40 shares is in place. The US equity4punks campaign has been a flop and they needed cash NOW to complete the Ohio brewery. Raising cash to hand it back to SHs wasnt going to work, so they sweetened the anti punk corporate sell out, by giving investors a little sugar. 

The company is still a phenomenal success  - it's just it's not quite as punk as it thinks it is. 'God save the Queen and Corporate regime' might be their new motto.  

Thursday, 13 April 2017

Oh Vulpine.

Vulpine make cycling clothes. A year ago they raised over £1m on Crowdcube at a £6m valuation. Having now missed all of their targets, they are back for more.

What the new pitch doesnt tell you is the gap between what this company tells you it will do and what it actually does. Its rather large. Lets take a look.

The new projected turnover for 16/17 according to the company is £1.3m. It was supposed to be £2.5m.

The new projected loss for 16/17 is £(445k). It was supposed to be a profit of £242k.

Of course this round is at a higher valuation than last years - based on the extra losses and lower turnovers. Makes perfect sense.

Hell these guys missed last years projections by miles as well, so you sort of expected as much. What wasnt in the projections was this new funding round - there were no new funding rounds.

There are reasons - the wholesale didnt really work so they are now into ecommerce. Maybe that could have been worked out beforehand?

There is an excellent Q on the Vulpine Forum on CC about the effect their almost permanent discounting is having on their GPM and more importantly the inflation of their headline online sales growth. Look, anyone can produce 200% annual sales growth by cutting the RRP drastically but that doesnt mean you can sustain it if you want to be making a profit at some stage. It is, we continue to argue, where the way Crowdcube allow companies to phrase their figures. is highly misleading. This guy clearly knows his onions.  

Now you know, you can all jump in fully informed.

Unfortunately it rather dampens Crowdcube's genuinely good news story - to follow. Still my mother always said there was the exception that proved the rule.

NEWS - This pitch has now been pulled - as noted in a comment below - thanks. At last the crowd is beginning to ask some pertinent questions - Crowdcube are having a very bad April. Look guys, you need to be more selective in the businesses you put on your site. You need to cover off the due diligence with real diligence and you need to take a far more active interest in what happens to companies after they have funded with you. Cut the PR and do some real work OR you are toast in 12 months. 

Tuesday, 11 April 2017

Crowdcube's Brewdog back slapping uses alternative facts

Crowdcube are rapidly overtaking KellyAnne when it comes to BS

Lets start by stating that Brewdog is a massive success and that all the first three EFP round investors will see great returns - even if they cant realise them all now. Worth noting the company was a massive success before they went to Crowdcube. 

Then lets read the PRing put about by Luke Lang's machine - here 

Firstly the whole tone is very misleading, as Crowdcube investors came to the party very late, in 2016 and will only see returns of 1.7X. Not that great unless you look at the other returns CC have offered.

Secondly this PR is clever in that it glosses over the facts - that Crowdcube investors who are affected by this £1bn valuation are a very small number in terms of the figures CC quote here. Only £800k of the total came via equity  - the rest, £12.3m of the quoted £13.13m, came via bonds which have a fixed rate of return no matter what the valuation. These, representing the vast majority of CC investors, are totally unaffected by this £1bn story.

Finally, as someone very kindly pointed out in the sick as a dog post, TSG are getting Pref C shares which gives them a guaranteed 18% return and all the other share classes will pay for this. The comment is worth a read if you want to see how clever Brewdog have been and how minimal the upside really is for CC investors. 

So rather than blowing their own massive trumpet, isnt it time Crowdcube ate a good helping of humble pie and agreed that yet again CC investors have been ridden over with no regard to their rights whatsoever. 

Sunday, 9 April 2017

Sick as an Equity Punk Dog.

Brewdog, the Voldemort of the financial establishment, just sold out its equity punk army. Welcome to the real world boys.

Just to make a few points clear for readers - some of whom have tried to comment but have not been posted as we felt the comments were ill informed. This blog is about investing via an ECF platform. So most of the Brewdog investors are not relevant here. Brewdog has been a phenomenal success - to this point. Yes early stage investors (via BD's own campaigns) have seen great returns - although figures out there range from 2800% (Brewdog's own figure and 600%  - a comment here). Our estimate is that CC investors could see a 170% return or 1.7X but this is limited in scope as you cant sell more than 15% of your holding. The point of this post is that BD have always been v proud of being outside the mainstream - but here they are helping themselves to it. Their US ECF campaign has been a flop, their exponential rise in profits has slowed and they were in trouble - half finished US brewery needs cash. So they went the orhtodox, establishment, PE route. Given what they said about Camden we thought this was worth writing about. 

Brewdog have raised their own ECf and used Crowdcube to tune of many millions over the last 3 years. They harangued Camden Brewery for selling out to the massive ABV. 

Now with the failure of their US ECf campaign, they have crashed into reality. The new build, half finished, brewery in Ohio needs funding and money really doesnt grow on trees; even in Ohio. Not even if you are punks.

So the Brewdog has lain down and rolled over; selling 22% of the company for £100m to US PE firm TSG. The founders, Watts and Dickie, have also sold 10% and 8% respectively of their own holding to TSG, along with a few selected investors, for another £113m. Everyday Crowdcube investors would not have been invited. You are the real punks now.

We have been banging on about their poor performance in the US - the ECf campaign there is woeful. Well here is the result. Dilution bonanza. Will their US plans work out - my guess is no.  

Saturday, 8 April 2017

Seedrs takes legal action against the Superwoman known as Nicola Horlick

Have Nicola's Crows eventually come home to Roost. 

Nicola Horlick has become embroiled in a new scandal - clearly she has missed them.

She was involved in a Seedrs raise for her Glentham Capital vehicle and had committed to putting in a missing £250k that had been promised in the pitch. This money has never materialised and Seedrs have run out of patience. We broke this story about Nicola sometime ago and have been keeping you up to date with developments - see here

So we wait to see what happens next. 

Welcome to the Herd.

In a recent radio interview with Share Radio - due to be broadcast this Monday at 4pm, we were asked about the herd mentality in Equity Crowdfunding. It was clear that its existence was doubted. So just in time, we have a classic example of it at work on Crowdcube.

Floom's campaign was to raise £390k. It came to end of its alloted time short by around £40k. As is usual with a pitch that close to line, it was given an extended time frame to complete - otherwise Crowdcube dont get their commission. All fine. 

It did get over the line. It's what happened next that is interesting. All of sudden within a couple of days, a pitch that couldnt get together a few thousand to complete in its last few weeks, was inundated with investment and is now  - just days after the original deadline, overfunding by £65k and climbing. It has remained consistently on top of the pile of 'recent investments' since completion. 

The business hasnt changed, the model hasnt changed and the valuation hasnt changed. It's great to know that the herd is alive and well.

Friday, 7 April 2017

The JIVR bike freewheeling journey could be coming to an end.

JIVR raised over £160k on Crowdcube in 2014. It also raised over £120k on Kickstarter - where they stated the estimated delivery was April 2015. To date nothing has been delivered and the accounts are overdue with a compulsory closure notice sitting on their file.

It is a great looking electric bike but at well over £2000 retail, I suppose it should be. We just wonder about its demand level.

Why the company cant manage to file the appropriate accounts on time isnt clear, but it does indicate that the team may not be very efficient.

When they pitched on Crowdcube in 2014, they gave a specific list of outcomes for 2016, the year they predicted they would sell the business. 

Forecasted valuation as of December 2016:

P/E    Valuation    1st Round Investors’ Stake   Equity Stake Valuation     ROI (pre-tax)
 15    £21,532,039                17.5%                          £3,768,106                 2,512%
 20    £28,709,385                17.5%                          £5,024,142                 3,349%
 25    £35,886,731                17.5%                          £6,280,177                 4,186%

Of course a PE ratio demands an E to make it work. They have no E except for the rather tenuous pre sales they are trying off their website. The accounts will show the extent of the damage if they are filed. Around £500k of new money was invested in 2016, so there is still hope. Probably best to put the Crowdcube pitch figures down as a joke in poor taste. 

Thursday, 6 April 2017

Shaken fiasco gives shareholders a hard screw up against the wall.

The Seedrs platform helped raise over £200k for this subscription start up in 2016, having already helped them raise over £120k in 2014. Within 6 months they had announced they were closing down.

How is that possible? 

It's very hard to understand how this could happen unless there was some element of shady dealing going down. The Seedrs video paints a very positive picture; traction over Christmas 2015 appeared strong according to figures supplied by the company - £40k in revenue. 

However the key figure is the retention rate. In the January following on the growth in December, 70 of the 300 active subscriptions became inactive. You cant survive a business on those figures. Yet during this time, the company was actively promoting its pitch on Seedrs. And the promotion was very strong - lots of positive noise about take up and traction and many leading industry experts stating that this was the next big thing.

More is revealed in a despairing email at the end of April 16 from the directors. Here it shows monthly costs were around £30k on a monthly income of under £10k. There's your problem boys - right there! What percentage of this £30k is their salaries isnt clear but our guess on this tiny income, is a very healthy slug.   

We have seen some poor businesses pitch on ECF platforms and go quickly bust - but this one seems a little odd. They had stockists like Fortnum and Mason, Harvey Nichols and Selfridges. They had some traction and they raised over £300k. That should have been enough to get them going. So you have to ask why did it only take 6 months after the last raise for them to close down?

Of course one explanation regarding the stockists, is the age old tale of first time listings. Whilst they look impressive, an opening listing means very little if the pull through customer demand doesnt result in follow up orders. Did Seedrs check this?

The final twist here, is that they are not being allowed to close. The voluntary strike off has been suspended which indicates that someone isnt willing to let this happen. It is often HMRC who prevent this - on the grounds they are owed rather a lot of money. Either that or an irate shareholder wanting to know how all those positive vibes resulted in the company being shaken to death. Either way, this is tale worth noting for would be billionaires investing in ECF.

In what is surely one of the most pathetic apologies ever written for a rapid fail business that has burned over £300k in 18 months, here is the eulogy that the founders gave at this year's Seedrs Oscars Ceremony - hanky at the ready please -

Dear Shareholder,     

Last week we shipped the final Shaken box: this is the end of our startup.    That's the hardest thing we’ve ever had to write .   

Despite trying everything, we couldn't quite make it through a tricky cash­flow period to get to the scale we  needed. This is the end of the road for us and that breaks our hearts.    We wanted to write this to explain why, and to thank you.    

As David said: “We went from “not knowing what we were doing” to becoming “​ a leading voice in the world of  cocktails​ ,” because ​ the best way to become an expert is to do something nobody has ever done before. 

We all  became experts in our field. We all pioneered a new way of doing booze. We all defied convention and did it the  hard way.”    But that was not enough.    Without new investment, we couldn't scale fast enough to make the business successful. The upsetting irony is  that we were starting to see industry ­leading retention numbers, more and more brands sign up exclusively, and many other indicators that we were at the tipping point. No business has an innate right  to succeed, but we gave  it everything.     

We’re sorry we let you down. We tried everything in our power to make this venture a success and, though we  got close, it just wasn't the right time.  Most of you will benefit from SEIS/EIS tax relief, so it's not a complete loss.  Thank you for being the engine driving this journey. In particular, special thanks to Allan Sayers who first believed  in us and James Cronin, Bimal Shah and Duane Jackson who were great inspirations and more.      

To anyone who ever made a Shaken cocktail: every day, it delighted us to see your photos, blogs, emails and  comments. We set out to help you mix the best cocktails you've ever made and we know we succeeded at that.  

We’ll miss seeing your great cocktail creations and hope you'll remember us fondly and go on to spread the word  that making great drinks at home is not difficult. There is a home cocktail revolution coming and you're the  vanguard.    

We poured every ounce of ourselves into Shaken. It will take a little time to accept that we won't be steering this  fine ship anymore, but we will all live to fight another day, stronger and wiser but hopefully just as ready to try  new things, to experiment, to break rules and to have fun.    Are we disappointed? More than there are words. We had a shot at creating something grand and we fell short.    

Would we go for it again? In a heartbeat.    

Thank you.  Until the next round,  Alex, David and Mark 

You can also listen to this guy giving his reasons for the failure on a radio interview here  as part of his self promotional BS. It turns out that Mark Jennings is now selling his wares as an expert in equity crowdfunding - he approached one of the platforms, not Seedrs, to sell his snake oil products but they declined. Rubbish breeds rubbish.

Wednesday, 5 April 2017

More tales of Woe from Crowdcube funded companies

So most of the March 2017 filings are in and its the worse than we thought. All but one failed to get anywhere near to their projections. 

At the same time the Crowdcube PRing machine relentlessly continues to churn out more positive spin about how successful they have been. Now 500 companies have funded via the platform, they proudly and loudly announce. At the current average of 95% missing their projections ( ~ 194 out of 204) that means 475 will eventually go west. Good job.

It is very simple to understand but no one seems to get it. When you fund poor business plans and poor business teams, they fail. When you take a non scalable business and try to scale it, it implodes. If you keep doing it, they keep failing and imploding. If you also offer investors under SEIS almost all of their money back, then these investors have no reason not to keep on investing... just in case. 

What does it do for UKplc, we were asked on Share Radio? Listen on Monday at 4pm for the answer. Its goes something like this ......well the insolvency guys are all buying new cars and the bemused creditors are all walking to work.

Some of these guys put the A back into filing - here are the latest......

Disarmco - Projected profits over £400k actual losses £23k. Cash has run out.

Rollasole - Projected profits over £450k actual losses £60k. 

Good news for investors in Mr Shericks Shakes is that the projected losses of £90k for the year were filed as just under £90k. Well done Mr Sherick - you stand alone as a beacon of sanity and hope above the Crowdcube killing fields.

Tuesday, 4 April 2017

Companies House is a steam engine in an high tech age.

What information filed at Companies House can you believe? All or none - it is a total lottery.

We went a CH seminar for new businesses last week. It was jolly enough event. However, when we asked about several areas of concern in relation to the veracity of the information they hold, they very quickly moved on - brushing the issues off as not up to them. Strictly speaking they are right, but a change needs to come soon if we are not to have some very serious disasters.

Take for example the company we looked up today, which had funded on Crowdcube in 2015. Their accounts just filed show share capital of £1 - ie none. Yet the Crowdcube platform and the company's AR show the shareholders. This is just one instance we have found over the last few years. The accounts are simply wrong. There are plenty more.

The CH representative told me that they have a clean out every so often which picks up any errors, he was unable to tell me how often. Equity Crowdfunding relies heavily on the veracity of the information filed at CH. 

Another issue we raised was the way that company directors are registered. You can have numerous registrations for the same person - with no overlap in the records - simply by using your names in different sequences. You may remember a classic case with Solar Cloth Co - he had 6 different CH registrations - none of them showed the directorships of the other 5. It would be very easy to fix - one unique number issued the first time you register and it becoming an offence to re register. Solved. 

Lets face it both CH and HMRC are struggling in the modern world. Short of resources and possibly know how, they need to get with the plan or we will be in one hell of a mess. 

Another Crowdcube farce comes to a bitter end

We mentioned Monii in our last post. Now we have confirmation from the Insolvency Practitioners - it has gone bust. It took £180k off Crowdcube investors just 10 months ago.

Shareholders received these glad tidings from the Liquidators - nothing from Oliver Gleave, the highly successful tech entrepreneur who promoted himself on Crowdcube. We tried to contact the company but their given address doesnt know them and the phone number is fake. 

Where will it all end?

Monday, 3 April 2017

Seriously folks - more of the same from Crowdcube

So much to report that we have bundled all of this into one post -

Minor Figures - accounts just out - more losses although Crowdcube projections showed profits for the last 2 years. Little traction and even less cash.

Farmdrop - accounts just filed with a handsome £1.96m loss for the 12 months against a breakeven forecast. Profits for 2016/17 of over £4m look unlikely, despite the new and much needed injection of capital. Dilution a gogo.

Ethos Global and Zero Carbon Foods, Little Brew, Jam Vehicles, accounts depts on long term sabbatical.

Rough Runner - due net profits of over £400k and filed actual losses of more than £200k. Using Micro accounts but supposed to have turnover of almost £1.5m

Monii - funded less than 12 months ago and reported liquidation but no confirmation. No presence on the web.

All looking good.

Saturday, 1 April 2017

Crowdcube funded company sells for £33m

In what Crowdcube's Luke Lang is hailing as a world first, Cashmeout Ltd, which funded on the platform in 2013, has been bought by a Swiss Bank for £330m - giving Crowdcube investors a return of  300X.

The company, which sells derivative biscuits, is chaired by Donald Trump's sister. Plans to open in the US had been brought forward following the Mr Trumps election. As a result the company received instant SEC accreditation - a move all commentators thought was perfectly normal given their penchant for chocolate creams . 'It's going to be beautiful', Ms Trump said of the recent sale....apparently.

Crowdcube, the worlds most successful equity crowdfunding company, has had many successes - you wouldnt believe how many they have had. But nothing on this scale. Both Luke Lang and Darren Westlake were available for comments - 24/7- and have been put forward for knighthoods for services to the Nation.

Investors have been warned that HMRC will be checking the SEIS paperwork for this company, which Crowdcube had forgotten to file. 'Its not important' stated Luke Lang. According to filings at Companies House, Cashmeout Ltd went into liquidation in 2014 and the Liquidators are still to complete. ' Its not important either' stated Luke Lang. President Trump's sister, Natasha Rostovia-Trump, could not be found for comment.